Last week, bitcoin recorded a positive overall performance, gaining 3.45%, according to bitcoin/” target=”_blank” rel=”nofollow”>CoinMarketCap data. This price increase adds to btc's bullish form over the past 30 days, during which the inaugural cryptocurrency has risen 16.78%. However, despite this market rally, there appears to be a growing trend of caution among bitcoin traders, indicating fear of a possible price drop.
Analyst Highlights Evidence of Growing Caution in the bitcoin Market
In an X post on SaturdayPopular crypto analyst Ali Martinez shared an interesting observation about the bitcoin market with his 37,000 followers.
According to Martínez, there is a significant decrease in the estimated leverage ratio in the btc market across all exchanges. This indicates that traders are reducing their leverage risk and are now acting carefully in the btc market, even amid the current price rally.
As bitcoin?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow”>#bitcoin When prices rise, we see a decrease in the estimated leverage ratio, a sign that traders are reducing their leverage risk. This suggests a more cautious approach in crypto?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow”>#crypto market despite $btc price rebound. pic.twitter.com/421FjfyV6b
—Ali (@ali_charts) December 22, 2023
For context, leverage is a trading function that allows users to borrow funds to increase the size of a position beyond what would be possible with one's own capital alone. Leverage allows traders to potentially amplify your profitsalthough it also carries greater risk.
Now, the estimated leverage ratio is a metric that quantifies the extent to which market traders use leverage. Therefore, a reduced estimated leverage ratio implies that traders are reducing the amount of funds borrowed relative to their own capital in their positions. In other words, they are decreasing the level of leverage they use, which can be seen as a sign of caution among traders in the face of a possible market decline.
The btc market, which is currently in an uptrend, has recently witnessed similar disconcerting events. On Friday, NewsBTC reported that bitcoin whales sold 50,000 btc worth $2.2 billion in the last week. All of these moves are indicative that investors are preparing for a possible downtrend.
btc Price
At the time of writing, bitcoin is trading around $43,626, down 0.09% over the past day. Meanwhile, the token's daily trading volume dropped significantly by 29.63% and is currently valued at $17.22 billion.
For now, there is no clear indicative danger to btc's bullish form. However, there is a high level of anticipation regarding a possible bitcoin Spot ETF approval order in January.
While many analysts predict that a bitcoin spot ETF will generate greater demand for bitcoin, others fear that the inaugural cryptocurrency will become a state-controlled financial asset. However, Bitget chief analyst Ryan Lee predicts that bitcoin will trade between $32,000 and $50,000, depending on the effects of this investment fund.
<img decoding="async" class="aligncenter size-large" src="https://technicalterrence.com/wp-content/uploads/2023/12/Analyst-Signals-Greater-Caution-in-Bitcoin-Market-Despite-Rising-Prices" alt="bitcoin” width=”1480″ height=”893″ loading=”lazy”/>
btc trading at $43,576 on the daily chart | Source: BTCUSD chart on Tradingview.com
Featured image from Reuters, chart from Tradingview
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
